1972 (11) TMI 90 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the revisional order made by the Deputy Commissioner of Commercial Taxes is time-barred.
2. The correct rate of tax applicable to the turnover of rice sold.
3. Inclusion of the value of gunny bags in the taxable turnover.
4. Legality and propriety of the Assistant Commissioner's order.
5. Application of additional tax under section 5-A of the A.P.G.S.T. Act.
6. Applicability of the doctrine of merger to the assessment order and appellate order.

Issue-wise Detailed Analysis:

1. Whether the Revisional Order Made by the Deputy Commissioner of Commercial Taxes is Time-barred:
The Sales Tax Appellate Tribunal accepted the dealer's contention that the revisional order was time-barred, as both the date of service of the revision notice (2nd September 1969) and the date of the revisional order (12th September 1969) were beyond four years from the date of service of the final order of assessment (29th March 1965). The High Court upheld this view, stating that the Deputy Commissioner's order was beyond the four-year time limit fixed for revision under section 20(3) of the A.P.G.S.T. Act. The assessment order dated 15th March 1965 did not merge into the appellate order of the Assistant Commissioner, and thus, the time commenced from the date of service of the assessment order.

2. The Correct Rate of Tax Applicable to the Turnover of Rice Sold:
The Assistant Commissioner agreed with the dealer's contention that if the rice sold was obtained from paddy that met tax under the A.P.G.S.T. Act at 3 paise per rupee, the turnover should be taxed at 1 paisa per rupee under item 66(b) of the First Schedule to the A.P.G.S.T. Act. However, the Deputy Commissioner later held that the correct rate of tax on inter-State sales of such rice should be 1 1/4 per cent, leading to a modification of the Assistant Commissioner's order. The High Court found that the Assistant Commissioner's view was correct and there was no illegality or impropriety in his order.

3. Inclusion of the Value of Gunny Bags in the Taxable Turnover:
The Assistant Commissioner upheld the inclusion of the value of gunny bags (Rs. 6,385) in the taxable turnover, following the decision of the Kerala High Court in Srinivasa Pai v. Sales Tax Appellate Tribunal. This part of the order was not contested further and stood justified.

4. Legality and Propriety of the Assistant Commissioner's Order:
The High Court examined whether the Assistant Commissioner's order was illegal or improper, which would give jurisdiction to the Deputy Commissioner to revise it. The court found that the Assistant Commissioner correctly directed the assessment officer to tax the turnover at 1 per cent if the dealer proved the rice was obtained from paddy that met tax under the A.P.G.S.T. Act. The court held that there was no illegality or impropriety in the Assistant Commissioner's order, and hence, the primary condition for the exercise of revisional powers by the Deputy Commissioner was not satisfied.

5. Application of Additional Tax Under Section 5-A of the A.P.G.S.T. Act:
The High Court noted that the question of levy of additional tax at 1/4 per cent under section 5-A of the A.P.G.S.T. Act was neither raised before the assessing officer nor decided by the Assistant Commissioner. The court held that the Deputy Commissioner should have revised the fresh assessment order dated 12th December 1967, where the Special Commercial Tax Officer failed to levy the additional tax, instead of revising the Assistant Commissioner's order dated 17th September 1965.

6. Applicability of the Doctrine of Merger to the Assessment Order and Appellate Order:
The High Court discussed the doctrine of merger and concluded that the assessment order dated 15th March 1965 did not merge into the appellate order of the Assistant Commissioner. The court referred to the Supreme Court's decision in State of Madras v. Madurai Mills Company Ltd., which stated that the doctrine of merger depends on the nature of the appellate or revisional order and the scope of the statutory provisions. Since the question of additional tax was not the subject matter of the appeal before the Assistant Commissioner, the doctrine of merger did not apply.

Conclusion:
The High Court dismissed the tax revision case, upholding the Sales Tax Appellate Tribunal's order that the revisional order of the Deputy Commissioner was time-barred. The court found no illegality or impropriety in the Assistant Commissioner's order and held that the correct rate of tax on the turnover of rice was 1 per cent, with the inclusion of the value of gunny bags justified. The court also clarified that the doctrine of merger did not apply to the assessment order and appellate order in this case.

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